7. IGNACIO VICENTE and MOISES ANGELES v. HON. AMBROSIO M.

GERALDEZ,
as Judge of the Court of First Instance of Bulacan, Branch V (Sta. Maria), and HI
CEMENT CORPORATION.

G.R. No. L-32473 July 31, 1973

ANTONIO, J.:
FACTS:
Hi Cement Corporation had acquired Placer Lease Contract No. V-90 under a
deed of sale and transfer. However, the plaintiff had requested the defendants to allow
its workers to enter the area in question for exploration and development purposes as
well as for the extraction of minerals therefrom but the defendants refused to allow entry
of the plaintiff's representatives. The plaintiff prayed the court to issue preliminary writs
of mandatory injunction. Meanwhile, the respective counsels of the parties then
conferred among themselves on the possibility of terminating the case by compromise,
the defendants having previously signified their willingness to sell to the plaintiff their
respective properties at reasonable prices. Compromise Agreement was approved by
the trial court. However, the plaintiff filed an opposition to the motions for execution of
judgment, on the grounds that a compromise agreement executed by the plaintiff's
lawyers who had no special power of attorney. Hence, these petitions.
ISSUE:
Whether a compromise agreement entered into by a lawyer without a written
authority is binding upon the corporation.
RULING:
No. Under the corporation law the power to compromise or settle claims in favor
of or against the corporation is ordinarily and primarily committed to the Board of
Directors. The right of the Directors "to compromise a disputed claim against the
corporation rests upon their right to manage the affairs of the corporation according to

their honest and informed judgment and discretion as to what is for the best interests of
the corporation." This power may however be delegated either expressly or impliedly to
other corporate officials or agents. Petitioners claim that private respondent's attorneys
admitted twice in open court that they were authorized to compromise their client's case,
which according to them, was never denied by the said lawyers in any of the pleadings
filed by them in the case. The claim is unsupported by evidence. In any event, assuming
arguendo that they did, such a self-serving assertion cannot properly be the basis for
the conclusion that the respondent corporation had in fact authorized its lawyers to
compromise the litigation.
ADJUDICATION:
WHEREFORE, the petitions are hereby dismissed.

8. PRIME WHITE CEMENT CORPORATION v.HONORABLE INTERMEDIATE

APPELLATE COURT and ALEJANDRO TE.
G.R. No. L-68555 March 19, 1993
CAMPOS, JR., J.:
FACTS:
Plaintiff and defendant corporation thru its President, Mr. Zosimo Falcon and
Justo Trazo, as Chairman of the Board, entered into a dealership agreement whereby
plaintiff was obligated to act as the exclusive dealer of the defendant corporation of its
cement products for a term of five years. Plaintiff informed the defendant corporation
that he is making the necessary preparation for the opening of the requisite letter of
credit to cover the price of the due initial delivery, looking forward to the defendant
corporation's duty to comply with the dealership agreement. The defendant corporation
replied that the board of directors of the said defendant decided to impose several
conditions. Several demands to comply with the dealership agreement were made by
the plaintiff to the defendant, however, defendant refused to comply with the same, and
plaintiff by force of circumstances was constrained to cancel his agreement for the
supply of white cement with third parties, which were concluded in anticipation of, and
pursuant to the said dealership agreement. Hence, this suit. After trial, the trial court
adjudged the corporation liable to Alejandro Te. The appellate court affirmed the said
decision, which in turn, forced the corporation to file this petition for review with the
Supreme Court.
ISSUE:
Whether or not the "dealership agreement" is binding upon the corporation.
RULING:
No. Te was not an ordinary stockholder. He was a member of the Board of
Directors and Auditor of the corporation as well. A director of a corporation holds a
position of trust and as such, he owes a duty of loyalty to his corporation. In case his
interests conflict with those of the corporation, he cannot sacrifice the latter to his own
advantage and benefit. As corporate managers, directors are committed to seek the
maximum amount of profits for the corporation. In the light of the circumstances of this

case, it is quite clear that he was guilty of disloyalty to the corporation; he was
attempting in effect, to enrich himself at the expense of the corporation. There is no
showing that the stockholders ratified the "dealership agreement" or that they were fully
aware of its provisions. The contract was therefore not valid and this Court cannot allow
him to reap the fruits of his disloyalty.
ADJUDICATION:
In view of the foregoing, the Decision and Resolution of the Intermediate
Appellate Court are hereby SET ASIDE.

9. YAO KA SIN TRADING, owned and operated by YAO KA SIN, petitioner,

vs. HONORABLE COURT OF APPEALS and PRIME WHITE CEMENT
CORPORATION, represented by its President-Chairman, CONSTANCIO B.
MALAGNA, respondents.
G.R. No. L-53820 June 15, 1992
DAVIDE, JR., J.:
FACTS:
Constancio B. Maglana, President and Chairman of the Board of private
respondent Prime White Cement Corporation (PWCC) sent a letter-offer to Yao Ka Sin
Trading ( YKS) which is represented by its manager, Mr. Henry Yao.
The letter is about an agreement to sell white cement. The board of directors of
PWCC disapproved the same. However Maglana continued to sell white cement under
a new contract. PWCC was not able to comply with the obligation, which prompted
YKS to file a complaint for specific performance and damages. The complaint was
based on the original letter-offer.
ISSUE:
Whether the aforesaid letter-offer, as accepted by YKS, is a contract that binds
the PWCC.
RULING:
Since a corporation, such as the private respondent, can act only through its
officers and agents, "all acts within the powers of said corporation may be performed by
agents of its selection; and, except so far as limitations or restrictions may be imposed
by special charter, by-law, or statutory provisions, the same general principles of law
which govern the relation of agency for a natural person govern the officer or agent of a
corporation, of whatever status or rank, in respect to his power to act for the
corporation; and agents when once appointed, or members acting in their stead, are
subject to the same rules, liabilities and incapacities as are agents of individuals and
private persons." 51 Moreover, " . . . a corporate officer or agent may represent and bind
the corporation in transactions with third persons to the extent that authority to do so
has been conferred upon him, and this includes powers which have been intentionally
conferred, and also such powers as, in the usual course of the particular business, are
incidental to, or may be implied from, the powers intentionally conferred, powers added
by custom and usage, as usually pertaining to the particular officer or agent, and such
apparent powers as the corporation has caused persons dealing with the officer or
agent to believe that it has conferred. 52

While there can be no question that Mr. Maglana was an officer the President
and Chairman of private respondent corporation at the time he signed Exhibit "A", the
above provisions of said private respondent's By-Laws do not in any way confer upon
the President the authority to enter into contracts for the corporation independently, of
the Board of Directors. That power is exclusively lodged in the latter. Nevertheless, to
expedite or facilitate the execution of the contract, only the President and not all the
members of the Board, or so much thereof as are required for the act shall sign it for
the corporation. This is the import of the words through the president in Exhibit "8-A"
and the clear intent of the power of the chairman "to execute and sign for and in behalf
of the corporation all contracts and agreements which the corporation may enter into" in
Exhibit "I-1". Both powers presuppose a prior act of the corporation exercised through
the Board of Directors. No greater power can be implied from such express, but limited,
delegated authority. Neither can it be logically claimed that any power greater than that
expressly conferred is inherent in Mr. Maglana's position as president and chairman of
the corporation.
Although there is authority "that if the president is given general control and
supervision over the affairs of the corporation, it will be presumed that he has authority
to make contract and do acts within the course of its ordinary business," 53 We find such
inapplicable in this case. We note that the private corporation has a general
manager who, under its By-Laws has, inter alia, the following powers: "(a) to have the
active and direct management of the business and operation of the corporation,
conducting the same accordingly to the order, directives or resolutions of the Board of
Directors or of the president." It goes without saying then that Mr. Maglana did not have
a direct and active and in the management of the business and operations of the
corporation. Besides, no evidence was adduced to show that Mr. Maglana had, in the
past, entered into contracts similar to that of Exhibit "A" either with the petitioner or with
other parties.
Petitioner's last refuge then is his alternative proposition, namely, that private
respondent had clothed Mr. Maglana with the apparent power to act for it and had
caused persons dealing with it to believe that he was conferred with such power. The
rule is of course settled that "[a]lthough an officer or agent acts without, or in excess of,
his actual authority if he acts within the scope of an apparent authority with which the
corporation has clothed him by holding him out or permitting him to appear as having
such authority, the corporation is bound thereby in favor of a person who deals with him
in good faith in reliance on such apparent authority, as where an officer is allowed to
exercise a particular authority with respect to the business, or a particular branch of it,
continuously and publicly, for a considerable time." 54 Also, "if a private corporation
intentionally or negligently clothes its officers or agents with apparent power to perform
acts for it, the corporation will be estopped to deny that such apparent authority in real,

as to innocent third persons dealing in good faith with such officers or agents." 55 This
"apparent authority may result from (1) the general manner, by which the corporation
holds out an officer or agent as having power to act or, in other words, the apparent
authority with which it clothes him to act in general or (2) acquiescence in his acts of a
particular nature, with actual or constructive knowledge thereof, whether within or
without the scope of his ordinary powers. 56
It was incumbent upon the petitioner to prove that indeed the private respondent
had clothed Mr. Maglana with the apparent power to execute Exhibit "A" or any similar
contract. This could have been easily done by evidence of similar acts executed either
in its favor or in favor of other parties. Petitioner miserably failed to do that. Upon the
other hand, private respondent's evidence overwhelmingly shows that no contract can
be signed by the president without first being approved by the Board of Directors; such
approval may only be given after the contract passes through, at least, the comptroller,
who is the NIDC representative, and the legal counsel.
The inevitable conclusion then is that Exhibit "A" is an unenforceable contract
under Article 1317 of the Civil Code which provides as follows:
Art. 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or
legal representation, or who has acted beyond his powers, shall be unenforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it, has been
execrated, before it is revoked by the other contracting party.
ADJUDICATION:
WHEREFORE, judgment is hereby rendered AFFIRMING the decision of
respondent Court of Appeals in C.A. G.R. No. 61072-R promulgated on 21 December
1979.

10. FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the

Philippines) and MERCURIO RIVERA, petitioners, vs. COURT OF APPEALS,
CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO, respondents.
G.R. No. 115849. January 24, 1996
PANGANIBAN, J.:
FACTS:
Producers Bank (First Philippine International Bank), is the owner of 6 parcels of
land. The Bank had an agreement with Demetrio Demetria and Jose Janolo for the two
to purchase the parcels of land for a purchase price of P5.5 million pesos.
The said agreement was made by Demetria and Janolo with the Banks manager,
Mercurio Rivera. The Bank however, through its conservator, Leonida Encarnacion,
sought the repudiation of the agreement alleging that Rivera was not authorized to enter
into such an agreement, hence there was no valid contract of sale.
Subsequently, Demetria and Janolo sued Producers Bank. The regional trial court ruled
in favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.
ISSUE:
Whether the Conservator Revoke the Perfected and Enforceable Contract?
RULING:
It is not disputed that the petitioner Bank was under a conservator placed by the
Central Bank of the Philippines during the time that the negotiation and perfection of the
contract of sale took place. Petitioners energetically contended that the conservator has
the power to revoke or overrule actions of the management or the board of directors of
a bank, under Section 28-A of Republic Act No. 265 (otherwise known as the Central
Bank Act) as follows:
Whenever, on the basis of a report submitted by the appropriate supervising or
examining department, the Monetary Board finds that a bank or a non-bank financial
intermediary performing quasi - banking functions is in a state of continuing inability or
unwillingness to maintain a state of liquidity deemed adequate to protect the interest of
depositors and creditors, the Monetary Board may appoint a conservator to take charge
of the assets, liabilities, and the management of that institution, collect all monies and
debts due said institution and exercise all powers necessary to preserve the assets of
the institution, reorganize the management thereof, and restore its viability. He shall
have the power to overrule or revoke the actions of the previous management and

board of directors of the bank or non-bank financial intermediary performing quasibanking functions, any provision of law to the contrary notwithstanding, and such other
powers as the Monetary Board shall deem necessary.
In the first place, this issue of the Conservators alleged authority to revoke or
repudiate the perfected contract of sale was raised for the first time in this Petition - as
this was not litigated in the trial court or Court of Appeals. As already stated earlier,
issues not raised and/or ventilated in the trial court, let alone in the Court of Appeals,
cannot be raised for the first time on appeal as it would be offensive to the basic rules of
fair play, justice and due process.[43]
In the second place, there is absolutely no evidence that the Conservator, at the
time the contract was perfected, actually repudiated or overruled said contract of sale.
The Banks acting conservator at the time, Rodolfo Romey, never objected to the sale of
the property to Demetria and Janolo. What petitioners are really referring to is the letter
of Conservator Encarnacion, who took over from Romey after the sale was perfected
on September 30, 1987 (Annex V, petition) which unilaterally repudiated - not the
contract - but the authority of Rivera to make a binding offer - and which unarguably
came months after the perfection of the contract.
In the third place, while admittedly, the Central Bank law gives vast and farreaching powers to the conservator of a bank, it must be pointed out that such powers
must be related to the (preservation of) the assets of the bank, (the reorganization of)
the management thereof and (the restoration of) its viability. Such powers, enormous
and extensive as they are, cannot extend to the post-facto repudiation of perfected
transactions, otherwise they would infringe against the non-impairment clause of the
Constitution.[44] If the legislature itself cannot revoke an existing valid contract, how can
it delegate such non-existent powers to the conservator under Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to revoke
contracts that are, under existing law, deemed to be defective - i.e., void, voidable,
unenforceable or rescissible. Hence, the conservator merely takes the place of a banks
board of directors. What the said board cannot do - such as repudiating a contract
validly entered into under the doctrine of implied authority - the conservator cannot do
either. Ineluctably, his power is not unilateral and he cannot simply repudiate valid
obligations of the Bank. His authority would be only to bring court actions to assail such
contracts - as he has already done so in the instant case. A contrary understanding of
the law would simply notbe permitted by the Constitution. Neither by common sense. To
rule otherwise would be to enable a failing bank to become solvent, at the expense of
third parties, by simply getting the conservator to unilaterally revoke all previous
dealings which had one way or another come to be considered unfavorable to the Bank,

yielding nothing to perfected contractual rights nor vested interests of the third parties
who had dealt with the Bank.
ADJUDICATION:
WHEREFORE, finding no reversible error in the questioned Decision and
Resolution, the Court hereby DENIES the petition. The assailed Decision is AFFIRMED.
Moreover, petitioner Bank is REPRIMANDED for engaging in forum-shopping and
WARNED that a repetition of the same or similar acts will be dealt with more severely.
Costs against petitioners.